It Is the Auditor's Job to Review the Client's Estimate

question 50

Multiple Choice

It is the auditor's job to review the client's estimate to evaluate whether it has been determined in accordance with the applicable financial reporting framework.To do this,the auditor considers whether the allowance for doubtful accounts is properly valued based on

• A)the accounts written off during the current year
• B)the accounts receivable balance at the end of the prior year
• C)current economic conditions
• D)the economic status of past customers
• E)the net receivable balance that should represent the amount of cash the company expects to collect in the current year
• F)both A and C
• G)both B and D

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Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period, helping businesses manage their liquidity.

Budgeted Disbursements

Planned financial outflows or payments calculated in advance as part of a budgeting process, often categorized and scheduled over a specific period.

Desired Balance

The target or goal for the balance of an account or budget at a specific point in time.

Budgeted Receipts

Expected cash or revenue amounts a business plans to receive over a certain period according to its budget.